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Apple And Google Have Huge Brands. The Rest Of Tech Is Stagnant.

When I say “tech,” you (probably) say: “Apple” or “Google.”

The two behemoths’ brands don’t quite swallow up the rest of the tech sector. But it’s close.

On Thursday, Interbrand unveiled its 15th annual list of the top 100 most valuable brands. Topping the list was Apple, with a brand value of $119 billion, followed by Google, whose brand totaled $107 billion. This was the first time any brand had topped $100 billion in value, much less two.

Technology has also made up an increasing share of the top 100 global brands: rising from 22.8 percent of all brand value in 2001 to 30.8 percent in 2014. (The 2000 Interbrand ranking is excluded from this analysis because it only ranked the top 75 brands.) Over the past 14 years, between 10 and 13 of the top 100 companies have been in tech. In 2014, it was 13, the second most of any sector (behind automotive with 14). It was only last year that Coca-Cola’s reign as the No. 1 global brand was toppled.

So, the U.S. business landscape is becoming more technology-heavy.

But technology is also becoming more top-heavy. Apple and Google are outliers, at least for brand appreciation. Excluding them, total technology brand value has risen about 11 percent since 2011. Add them in, and the sector’s brand value is up nearly 50 percent.

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A better measure is the average technology company’s brand valuation (that is, the average of those ranked in the top 100 by Interbrand). That has risen 38 percent, to $37.9 billion in this year’s rankings. But again, removing Apple and Google, and the typical major technology company has had a paltry 0.7 percent cumulative increase, to $24.3 billion.

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Besides Apple and Google, the typical technology company’s brand value has been flat over the past four years.

Of course, tech and brand are fuzzy concepts.

Which companies technically count as tech is up for debate. There are obvious ones, such as Microsoft, Oracle and Facebook. But how about Amazon? It’s classified as a retail company, yet its brand has risen by 25 percent in just the past year. Ebay? Also retail. Meanwhile, technology brands like Nokia, whose value has dropped like stone in the past year, weigh down the sector.

I spoke with Graham Hales, the global chief marketing officer of Interbrand, about the methodology behind its rankings. Although the method is proprietary, he walked me through the three main steps:

  • Estimate the economic profit of the company;
  • Then estimate the “role of brand,” a measure of how important the brand is to that profit;
  • Lastly, estimate “brand strength” relative to competition — a composite score derived from 10 factors including clarity, protection (such as patents and copyrights) and responsiveness.

Luxury goods companies such as Burberry will have a higher “role of brand” percentage than companies in more commoditized industries.

But what is “brand value”? It’s hard to pin down, but Interbrand has roughly defined it as an intangible kind of business asset corresponding to a company’s identification by consumers. Think of it as a company’s trust earned — trust by customers they will get a quality product, a promise met, or an image and feeling attained.

For instance, conjure up an image for “smartphone” and you probably think iPhone.

That’s brand value.

Andrew Flowers writes about economics and sports for FiveThirtyEight.

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